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Reasons to Consider a 1031 Exchange Program There are loads of benefits you potentially can get when you take advantage of a 1031 exchange program, but at the same time, it’s a very complex process overall, which means you have to be putting in the effort to understand it a little more before you even consider it. If you’ve been stressed out as of late because of putting your money in an investment property which isn’t making enough profit or you simply just want a change of investment scenery, you obviously are already aware that an upgrade or switch to another property remains a decent option. However, everyone knows how difficult this kind of move would be since there are so many requirements that need to be fulfilled. Considering the fact that there are so many requirements and factors to consider, most notably the tax considerations and the technicalities linked to closing the sale, the one thing you, therefore, must take care of is preparing yourself to go through all of it. Fortunately for you, there are a sensible means of taking care of the tax situation. What we’re talking about is the sale and purchase of a property as a 1031 exchange. Now if you aren’t aware of this option, then you must continue reading the reasons below on why you should consider it. 1 – You no longer will be required to pay capital gain taxes once the property is sold.
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The primary reason why you’re not even seriously contemplating the sale of your old investment so that you can buy a new one is because you’re aware of the fact that you will be forced to pay the taxes and fees as a result of the sale. The good news about the 1031 exchange program is that it allows you to skip the burden of having to pay taxes and still successfully switch to a different investment property with equal value.
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2 – You have the luxury to choose from a wide range of options. Another important advantage of a 1031 exchange, which in turn should be enough reason for you to consider it, is that it gives you so many different ways on how to conduct it. Today, the three most common options are simultaneous exchange in which you trade your property with another property on the same day, delayed exchange or when you sell your old property and find another within a specific amount of time, and reverse exchange, in which you buy a new property and then sell your old one later. 3 – It is easier to handle and deal with. Finally, you have to understand that there is nothing illegal about conducting a 1031 exchange because it essentially offers you the better and more sensible option of buying an investment property and taking full advantage of the tax deferral program.